Study predicts revenue loss if slots allowed off tracks

Pimlico, Laurel Park owner paid for report

December 05, 2003|By Michael Dresser | Michael Dresser,SUN STAFF

According to a study paid for by Maryland's largest owner of tracks, state revenues and the racing industry would suffer dire consequences if the state permits slot machines at locations apart from racetracks.

The study - the latest in a series released by various participants in the slots debate - predicts that the state would lose $150 million in annual tax revenue if video lottery terminals were located exclusively at nontrack locations.

The study was produced by Baltimore-based Optimal Solutions Group, a company operated by economic consultant Anirban Basu. It was commissioned by Magna Entertainment Corp., owner of Pimlico Race Course and Laurel Park.

Paul Micucci, an executive vice president of Magna, said the report validates what the racing company has observed where slots and racing are run together. "Professor Basu's report confirms our belief that harmonizing gaming and racing will provide the best results for the state," he said.

The study disputes recent reports that concluded that the state could raise significantly more tax revenue by putting slots at nontrack sites. In one, Robert E. Carpenter, an economics professor at the University of Maryland, Baltimore County, concluded that the tracks-only plan proposed this year would transfer "hundreds of millions of dollars of value from the people" to track owners.

In another, by Jeffrey C. Hooke, a Silver Spring investment analyst with a tax study group, suggested that the state could generate hundreds of millions of dollars by auctioning slots licenses. He also found that the experience in other states with off-track slots is that racing does not suffer greatly.

Basu's study faulted the reports for not accounting for potential job losses and tax revenue declines in the racing industry.

Basu's study presumes that if tracks are located away from the slots, none of the proceeds would go to purses or breeders.

House Speaker Michael E. Busch, a leading industry critic, called the premise "a fallacy." He said a portion of revenue from off-track slots could be diverted to purse and breeder subsidies.

In another case, Basu assumes the industry would spend $4.6 million on construction at the tracks if slots go elsewhere. He acknowledged that he did not account for Magna's commitment to spend a least $15 million on track renovations regardless of the outcome of the slots debate.

Busch said, "You take anything with a grain of salt when the industry does its own study on itself."